Consumer finance is simply understood as credit institutions providing loans directly to individuals or households to purchase goods and services for consumption purposes. In Vietnam, this form of operation through financial companies has brought many benefits not only to credit institutions and customers but also to the whole economy.
Development potential of consumer finance in Vietnam
Vietnam is considered one of the markets with great potential for credit and financial development. With a population of nearly 100 million people, and high and stable economic growth, per capita income increases rapidly (11% compared to 2021). In addition, the increasing consumption of goods along with the development trend of the economy, creates favorable conditions for consumer finance companies to develop and help people meet their capital needs to purchase and use goods. goods, services.
To serve and improve people's financial access, the Vietnamese government also issued Decision No.149 on the national comprehensive financial strategy with many positive solutions to support people to access financial resources. serving the needs of consumers, especially subprime people, who are unable to access commercial banks of State Bank.
Currently, there are 16 financial companies licensed by the State Bank of Viet Nam to provide consumer loans to people with unstable incomes and difficult-to-access loans from commercial banks to meet the expenditures necessary for living needs.
However, Vietnam's consumer finance market is currently still a market of 4 large enterprises with overwhelming market shares such as FE Credit, Mcredit, Home Credit, and HD Saison.
FE Credit
FE Credit Finance Company was established in February 2015 as a wholly-owned subsidiary by VPBank. In October 2021, VPBank announced the completion of its deal to sell a 49% stake in its FE CREDIT to SMBC Consumer Finance Company (SMBCCF), a subsidiary of SMFG. At the same time, VPBank Finance Company Limited was also renamed to VPBank SMBC Finance Company Limited.
After 11 years of operation, FE Credit has established a solid foundation and continuously maintained its leading position in the consumer finance market with a nationwide network of more than 21 thousand points of sale and more than 16,000 points of sale. With more than 12 million Vietnamese people having their financial difficulties solved, including 30% of new loan contracts each year, FE Credit has contributed to eliminating black credit, improving the living standards of working people, and promoting the consumer economy.
FE Credit's net interest income is among the top in the Vietnamese financial market. Net interest income decreased by 12-13% from 2020 to 2021 and remained around 15 trillion in 2022. Although net interest income decreased slightly, FE Credit's provision for credit losses increased continuously for three years. Specifically, in 2020, the company's provision for credit losses was about 9500 billion. This number increased by 22% in 2021 and 16.4% in 2022, reaching nearly VND 13.5 trillion. This showed that FE Credit was in an increasingly bad debt situation.
The decrease in net interest income together with the increase in provision for credit losses each year has caused FE Credit's profit after tax to drop sharply in 2022, reaching negative nearly VND 3500 billion while it recorded a positive profit of nearly VND 3000 billion in 2020 and VND 130 billion in 2021 in two years ago. The reason for this problem was said by VPBank that they had failed to achieve their business plan due to the recovery process of FE Credit after Covid was much slower than expected.
Home Credit
Founded in 1997 in the Czech Republic and headquartered in the Netherlands. Home Credit is an international consumer finance company with a presence in many countries around the world such as Russia, Ukraine, China, India, Indonesia, Philippines, and Vietnam,...
Launched in Vietnam in 2008, Home Credit is currently one of the top consumer finance companies in the Vietnamese market. The company focuses on providing consumer financial products such as consumer loans, loans to buy motorbikes, mobile phones, and electronics with more than 10 thousand transaction points at stores around the country.
Home Credit is one of the four major credit finance companies in Vietnam. In the period from 2020 to 2022, the company recorded stable growth as net interest income, provision for credit losses, and profit after tax all increased significantly. In 2022, net interest income reached nearly VND 6600 billion, an increase of 30% compared to 2021 and 49.3% compared to 2020. Home Credit's provision for credit losses in 2022 also recorded an increase of 25% compared to 2021 and 91% compared to 2020, reaching more than VND 2600 billion.
Profit after tax in 2021 had a slight decrease of 9% compared to 2022, from VND 600 billion to nearly VND 560 billion. After that, Home Credit's profit increased strongly again, up 112.4% over the same period last year, reaching nearly VND 1200 billion.
Mcredit
Mcredit, whose full name is MB Shinsei Finance Company Limited, was established in 2016 as a joint venture between Military Commercial Joint Stock Bank (belonging to MB Group) and SBI Shinsei Bank (Japan).
With the business strategy of "Customer-centric", Mcredit provides convenient financial solutions for customers by applying smart digital technology, connecting 26,884 payment points Payoo, MoMo, Viettel, VnPost, and payment systems. MBBank's system of branches and transaction offices nationwide.
In the period from 2022 to 2022, Mcredit also recorded stable growth as net interest income, provision for credit losses, and profit after tax all tended to increase year by year. In 2022, net interest income reached more than VND 5100 billion, an increase of 60% compared to 2021 and 85% compared to 2020.
Mcredit's provision for credit losses for 2022 also recorded an increase of 66% compared to 2021 and 70% compared to 2020, reaching nearly VND 2800 billion. Mcredit's profit after tax in 2020 reached more than VND 250 billion. This number increased to nearly 90% in 2021 and more than 100% in 2022, reaching more than VND 960 billion.
HD Saison
Established in 2007 with the original name of Vietnam Financial One Member Commercial Joint Stock Company (SGVF). In October 2013, SGVF belonged to HD Bank and changed its company name to HD Finance. After a capital contribution from Credit Saigon Financial Group (Japan) partner in April 2015, HD Finance officially changed its name to HD Saigon Finance Company Limited.
Over 15 years of development, HD Saison has provided consumer finance solutions to more than 11 million customers through more than 23 thousand transaction points, including retail stores such as motorbike, automobile, and electronics stores. machinery,... as well as businesses in fields such as tourism, education, beauty, and many other fields across the country.
HD Saison's net interest income fluctuated at 3800 billion in 2020 and 2021. Then it increased by 20% in 2022, reaching more than VND 4600 billion. Meanwhile, HD Saison's provision for credit losses and profit after tax continuously increased. Specifically, in 2022, the provision for credit losses reached nearly VND 2400 billion, up 46% compared to 2021 and 96% compared to 2020. Profit after tax also recorded a positive level of around VND 800-900 billion in three years. In 2022, profit after tax reached VND 920 billion, up 15% compared to the previous two years.
Mirae Asset Finance
Mirae Asset Finance Company Vietnam is a member of Mirae Asset Group from Korea, with 20 years of experience in finance, securities, and investment,... and is present in 16 countries with a system of 200 offices and branches worldwide.
Presented in Vietnam in 2006 and officially put into operation in 2011, the company was built on the vision of always pursuing an optimal investment management strategy, to support customers to achieve their long-term goals. term and create conditions for customers to have the opportunity to access capital effectively, legally, and safely.
In the period from 2020-2021, the net interest income of Mirae Asset Finance increased slightly year by year. In 2022, net interest income reached more than VND 2600 billion, up 18% compared to 2021 and 37% compared to 2020. Provision for credit losses also recorded a slight increase year-on-year from VND 1400 billion in 2020. 20% in 2021, reaching nearly VND 1700 billion. By 2022, provision for credit losses increased by 21%, reaching more than VND 2,000 billion. However, the profit in three years of Mirae Asset Finance only fluctuated in the range of VND 125-130 billion.
Shinhan Finance
Shinhan Finance's full name is Shinhan Finance Vietnam One Member Limited Liability Company with 100% foreign capital, under Shinhan Card Corporation (Korea).
In 2016, Shinhan Card officially completed the acquisition of Prudential Financial Company. After that, the company was granted a license to operate for 50 years. By 2019, the Company officially operated under the brand name Shinhan Finance.
With the legacy of Prudential's more than 10 years of experience in the field of consumer lending. Up to now, Shinhan Vietnam has its head office in Ho Chi Minh City, along with 24 branches nationwide. Shinhan Vietnam quickly became one of the leading financial companies in Vietnam.
In 2020, the provisional income of Shinhan Finance was more than VND 1800 billion. This number increased by 9.5% in 2021 and continued to increase by 15.7% in 2022, reaching nearly VND 2350 billion. Provision for recorded expenses increased year by year from almost 1200 billion in 2020 to nearly 1700 billion in 2022, up 42%. However, profit after tax in 2021 and 2022 recorded a slight decrease compared to 2020. Specifically, in 2020, Shinhan Finance's profit after tax reached nearly VND 340 billion. This figure decreased to VND 230 billion in 2021 and increased slightly by 10% in 2022, reaching more than VND 250 billion.
SHB Finance
SHB Finance, established on June 12, 2016, is a company under Saigon - Hanoi Commercial Joint Stock Bank (SHB). Currently, SHB Finance has been present in most provinces and cities nationwide and is continuing to expand its market through branches and cooperation partners.
SHB Finance always strives to provide the best consumer financial products and services to meet the needs of customers and contribute to the economic development of the country.
In three years from 2020 to 2022, the company recorded stable growth as net interest income, provision for credit losses, and profit after tax all increased significantly. In 2022, net interest income reached nearly VND 1400 billion, up 23% compared to 2021 and 41.4% compared to 2020. Home Credit's provision for credit losses in 2022 also recorded an increase of 58% compared to 2021 and 108% compared to 2020, reaching nearly VND 1300 billion.
Profit after tax had a sharp decrease in 3 years. Specifically, in 2020, profit after tax was recorded at nearly VND 60 billion. This number decreased to nearly 55%, reaching VND 26 billion in 2021. By 2022, profit after tax decreased more seriously and recorded a negative loss of nearly VND 105 billion.
VietCredit
VietCredit's full name is VietCredit Finance Joint Stock Company, established in 2008. The company operates in the fields of personal credit, securities investment, and capital business. In 2018, VietCredit started to participate in consumer finance with the main product being the domestic credit card VietCredit.
VietCreadit is considered one of the pioneering companies in issuing loan cards in the market, giving customers the flexibility to advance cash at ATMs or swipe payment cards for daily spending and shopping as well as having an additional provision for loans of urgent situations.
The indicators of net interest income, provision for credit losses, and profit after tax of VietCredit increased continuously. In terms of net interest income, VietCredit recorded a net interest income of nearly VND 700 billion in 2020. This figure increased by 73% in 2021 and continued to increase by 10% in 2022, reaching over VND 1300 billion. VietCredit's provision for credit losses in 2022 reached more than 710 billion VND, up 13% compared to 2021 and 90% compared to 2020. Profit after tax recorded a positive level in three years, from 33 billion VND in 2020 increased to more than VND 60 billion by 2022.
EVN Finance
EASY CREDIT is a trademark of the Electricity Joint Stock Finance Company (EVN Finance) established in October 2018. The main task of EVN Finance is to arrange and manage capital flows for power projects of EVN, the party besides providing financial products and services to units in the electricity industry and other economic sectors.
In 2018, EVN Finance launched the Easy Credit brand to provide unsecured consumer loan support products for all customers, aiming to become the leading unsecured lending brand with a quick process.
EVN Finance recorded a slight increase in net interest income year over year. In 2022, net interest income reached nearly VND 920 billion, up 17% compared to 2021 and 29% compared to 2020. However, provision for credit losses has increased and decreased continuously. Specifically, in 2020, provision for credit losses reached nearly VND 320 billion. This number increased by 60% in 2021 and decreased by 28.8% in 2022, reaching more than VND 360 billion. Profit after tax still recorded an increasing trend year by year. In 2020, EVN Finance's after-tax profit reached nearly VND 230 billion. This number increased to nearly 45% in 2021 and increased by 10% in 2022, reaching nearly VND 370 billion.
JACCS Vietnam
JACCS (Japan Consumer Credit Service) was established in 1954 in Japan. It is one of the oldest financial companies in Japan and the pride of the Japanese economy. In 2010, JACCS was established in Vietnam with the full name of JACCS Vietnam International Finance Company Limited (JIVF) and has a charter capital of VND 550 billion.
After more than 10 years of development, up to now, JACCS has been present in 62 provinces and cities across the country, 1500 transaction points with 1000 employees have served more than one million customers during the past 13 years.
JACCS's net interest income had not changed significantly in three years, around VND 810-820 billion. However, the company's provision for credit losses and profit after tax increased and decreased continuously. Specifically, in 2020, the provision for credit losses reached more than VND 170 billion. This number increased by 67% in 2021 and decreased by 10% in 2022, reaching nearly VND 270 billion. Profit after tax in 2020 reached VND 75 billion. This number decreased by 59% in 2021 and increased by 120% in 2022, reaching VND 68 billion.
Toyota
Toyota Finance Vietnam Company Limited (TFSVN) is a 100% foreign-owned financial company invested by Toyota Finance Corporation (TFC) and a member of Toyota Financial Services Corporation (TFSC).
In Vietnam TFSVN – Toyota Vietnam Finance One Member Company Limited was established in 2008, the company provides Toyota car loan products and services and other financial products and services such as consumer loans, use mortgage loans, and insurance.
Toyota's net interest income in 2020 reached more than VND 430 billion. This figure increased to 16% in 2021, reaching more than VND 500 billion, and remained unchanged in 2022. Toyota's provision for credit losses and profit after tax has increased and decreased continuously. Specifically, in 2020, the provision for credit losses reached nearly VND 60 billion. This number increased by 123% in 2021 and decreased by 60% in 2022, reaching more than VND 360 billion. Toyota's after-tax profit in 2022 reached nearly VND 240 billion, down 4% compared to 2021 but up 25% compared to 2020.
Lotte Finance
Lotte Finance is a Korean consumer finance company operating in Vietnam, specializing in providing financial products and services to individuals and businesses.
In 2017, LotteCard signed an agreement to acquire 100% of the shares of Techcom Finance of Techcombank, marking the expansion of investment and penetration into the Finance sector of LOTTE Group in Viet Nam. Lotte Finance Company's business license was approved by the State Bank of Vietnam in September 2018, making LotteCard the first Korean credit card company allowed to operate in Vietnam.
Lotte Finance's net interest income fluctuates at 390 billion in 2020 and 2021. Then it increased by 15.5% in 2022, reaching 450 billion dong. Meanwhile, the provision for credit losses was constantly changing. Specifically, in 2020, the provision for credit losses reached about VND 390 billion. This figure increased by 7.6% in 2021 and decreased by 22.5% in 2022, reaching VND 325 billion. Lotte Finance's profit after tax recorded a negative profit for three years. However, the negative profit level tended to decrease year by year. In 2022, profit after tax reached nearly negative VND 275 billion, reducing losses by 30% compared to 2021 and 44.4% compared to 2020.
With the development of the modern retail system, store chains gradually replaced traditional individual stores, making it easier for consumer financial service providers to reach a large number of borrowers. Financial companies are also increasingly stepping up their activities, competing with some traditional banking segments such as credit cards and automobiles. On the one hand, financial companies develop their main product, which is installment sales and gradually develop cash loan products.
However, the companies need to continue to overcome some limitations of this market to improve the efficiency of consumer lending, push back informal credit with a focus on black credit, and contribute to stimulating economic growth.
Source: Vietdata'2022 Consumer Finance Market Report